Answer
The following two are foreign direct investments.
a. A Chinese company pays $6.49 million for a stake in the Hilton.
d. A Turkish company builds a factory in Ethiopia and manages the factory as a contractor to the Turkish government.
When a business entity based in one country expands its business by creating new production facility through greenfield investment, or through merger and acquisition of the companies based in another country, the investment done by the former is called foreign direct investment (FDI).
In the above two cases, in first one, we see that a Chinese company pays $6.49 million for a stake in the Hilton, which is a US based multinational company. Here, the Chinese company acquires $6.49 million worth share in Hilton.
In the second one, we see that a Turkish company builds a factory in Ethiopia and manages the factory as a contractor to the Turkish government. It is a Turkish greenfield investment in Ethiopia. So, it is also a foreign direct investment.
Options (b), and (c) are not FDI.
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Which of the following are foreign direct investments? And Why？ a. A Chinese company pays $6.49...
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